Can You Really Get A No Money Down Usda Loan?

USDA loans offer homebuyers the option to get a mortgage even without a down payment. Because their goal is to support very low or low-income families with their goal of buying a home, removing the need to pay a down payment will make it much easier for them to become homeowners.

As with any other mortgage or loan, there are specific requirements that determine who is eligible.

1. Credit History
This is the most important requirement for any loan because lenders want to be sure that you are able to pay your obligations when they are. They will look at how you have been able to pay off your credit card balance and other bills. Even if you have had issues in the past, you need to make sure you have a clean record for the past year. Compared to an FHA loan, you will need a higher credit score in order to qualify, with the minimum set at 640. You should also not have any foreclosures or bankruptcies for the last 3 years.

2. Property Restrictions
Loan applicants need to live or reside on the property they are interested in buying as their primary residence. You can buy either a new or an existing home, with no other restrictions on the size, design, or layout. It should, however, be safe, sanitary and should meet all building regulations of the area. Getting a loan to buy a used mobile home is not allowed. If you already have property, you can still apply for this loan so long as the house you will purchase will be your primary residence.

3. Income Requirements
There is no nationwide income limit that will dictate whether you are eligible for a USDA loan because it is set for every county. It cannot exceed the limit that has been set for your county and the income limits are based on how big the family is. Still, even families with a moderate income can qualify for this loan.

4. Job History
With every home loan, you need to show proof of income history, for a total of 2 years. The only exception to this requirement is when you are fresh out of college. While having switched jobs is not a problem, you should make sure you have no unreasonable gaps in employment.

5. Location
While the loans are issued by the US Department of Agriculture, it does not mean that only farmers or those interested in purchasing farmland are qualified. Instead, most rural areas outside of the city limits and with a population of no more than 20,000 are the targets of these loans. Even certain areas close to urban areas can be qualified.

The USDA loan is one of the easiest ways to become a homeowner even without some savings set aside for a down payment. All you need to do is to pass all the other requirements and you will get approved.